Stern: Financial crisis could promote clean energy

Global financial turmoil must not block creation of low-carbon economy, warns leading economist
Juliette Jowit
guardian.co.uk,
Tuesday October 07 2008 00:01 BST

Lord Stern of Brentford, author of the government's influential report on climate change, has warned against the "danger" of letting the world economic turmoil block action to build a low-carbon economy.
But he also said the current situation "could be used well" to promote investment in efficiency and clean energy to help the UK and other countries boost their economies.
Speaking to the Guardian ahead of a speech to launch a new climate change economics centre at the London School of Economics, Stern said there were "two kinds of danger" because of the current fears of recession. "One [is] people can only concentrate on a limited number of things at the same time, and the second is people will be sensitive to cost increases, and those will have to be managed carefully," he said. "There's a danger: it needs leadership."
Instead, he argued, the current problems could help boost investment in tackling climate change because they have highlighted the dangers of not tackling global risks early enough, and could create much more international cooperation.
There were also more incentives to invest in energy efficiency during a recession and high oil prices, and spending on renewable and other low-carbon industries could help stimulate the economy, said Stern.
"We're going to have to grow out of this and have to create growth opportunities for long-term sustainable investment, and this is an area which looks as though it could well grow strongly and with the right support could be one of the major engines of growth," he said.
Stern's comments will be echoed today by the government's Technology Strategy Board, which will warn businesses it would be a "terrible mistake" to cut investment in new technology during the downturn.
"We will come out of this downturn and when we do it will be the businesses which held their nerve and continued to invest that will come out of the downturn first [and] emerge stronger and better equipped to face the challenges of the future," Iain Gray, the board's chief executive, will say.
Launching the Grantham Institute and the Centre for Climate Change Economics and Policy, Stern also outlined his global plan for action on greenhouse gas emissions, including a cut of 80%-95% in emissions for developed nations and a "commitment to commit" to cuts by the biggest developing countries like China and India, possibly as soon as 2020.
By 2050, average global emissions needed to be equivalent to 2 tonnes of carbon dioxide per person to try to avoid dangerous climate change, compared to 10-12 tonnes in the biggest economies, 5 tonnes in China and 1.5-2 tonnes in India, said Stern.
"The developing countries average emissions will have to be 2 tonnes by 2050 if the world average is 2 tonnes because they'll have 8 billion of the 9 billion [people]," he said.
But despite the big changes a clean energy revolution would herald, Stern predicted the impacts on people's lives would be less than the information technology revolution, for example: "We'll still move around, we'll heat our homes - homes will be more efficient and close to zero-carbon electricity. But at the same time it will be cleaner, quieter, more biodiverse, all those things. It will actually be much nicer."
Stern's report for the Treasury in 2006 famously described climate change as the world's greatest "market failure". But he dismissed suggestions the current economic crisis would prompt wholesale economic reform: "We're talking about fixing a market failure and achieving growth of a different kind: low carbon growth."